XR and the network edge: Luxury or necessity?

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In this report we outline the extent to which XR applications will leverage the network edge. As XR matures within enterprise and begins to enter the consumer market, the telecoms industry is eager to discover whether it will leverage the network edge.

What is XR?

Extended reality or XR encompasses augmented reality (AR), virtual reality (VR), and mixed reality (MR). To varying degrees these involve imposing virtual images on our view of the world:

  • AR involves imposing virtual images on top of our real world view
  • VR involves fully immersing the user in a 3D virtual world
  • Mixed reality involves virtual images which interact with objects in our real world view.

XR can be experienced to a varying level of immersiveness on a number of devices including smart phones, headsets, or next-generation glasses.

While this technology has existed in some capacity for over five years, these initial applications were primitive: high levels of jitter, ‘dumb’ applications, and heavy, wired devices. In the past two to three years we have started to see XR applications advance to a stage where they can bring significant value to enterprises and consumers. With the proliferation of 5G and the advent of edge computing, XR is a hot topic in the telecoms industry and is seen as a potentially key application for monetising these technologies.

In this report we will investigate the current and expected demand for XR and crucially, how much it will need the edge.

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Does XR need edge computing?

Edge computing ensures application workloads are stored and processed close to where the data is being generated. Generally, these edge workloads are either:

  1. Being moved from the cloud closer to the end device, in order to reduce latency, minimise bandwidth requirements and assure data sovereignty;
  2. Being moved off the device running them at nearby edge locations, where they still benefit from lower latency while enabling lighter, cheaper devices.

In this report, we will focus on the opportunity at the network edge, where telco infrastructure can be leveraged to deliver a combination of benefits traditionally associated with workloads running both in the cloud and on the device. Combined with 5G, mobile network operators have seen this as a significant potential revenue opportunity. The network edge opportunity for XR is spread across a number of different use cases, as indicated in the figure below.

Total addressable revenue from network edge-enabled XR use cases in Europe


Source: STL Partners edge market sizing forecast, Dec 2023 release

We expect that the demand for XR applications will increase in both the enterprise and consumer space over the next 12 – 18 months, but how much of this will leverage the network edge? Moreover, can the edge actually be a key driver behind an increase in XR demand?

XR is a proven network edge use case

XR has long been touted as one of the most promising use cases for monetising the network edge. It is in the sweet spot of requirements that are met by the network edge:

  • Low latency and low jitter are a requirement for user experience (especially if wearing a headset or glasses this can cause nausea), this is much lower at the edge than in the cloud.
  • Lighter devices are crucial for scaling XR as they enable users to wear headsets in more settings.
  • For applications with high levels of image processing, GPUs on device use up a lot of power so this is better offloaded.
  • Applications which require video streams take up a lot of bandwidth and it is costly to transport this data to the cloud.
  • Many XR use cases in enterprises have a large data security or sovereignty element because of facial recognition or business security, this is more guaranteed at the edge than the cloud.

The network edge has been proven for running XR use cases

Source: STL Partners

Table of contents:

  • Executive Summary
  • What is XR?
  • How much demand is there for XR?
    • Enterprise
    • Consumer
  • Does XR need edge computing?
  • Recommendations for MNOs

Related research:

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Matt Bamforth


Matt Bamforth

Senior Consultant

Matt is a Senior Consultant at STL and has experience in consulting projects across a wide range of topics. These span areas such as 5G, private networks, telco cloud, and edge computing. Matt has previous experience in strategy consulting, as well as in the Fintech sector. He holds a BSc in Economics from University College London.